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Sudhanshu Ranade

Chennai , March 22

A report in Business Line a few weeks ago spoke of the migration of deposits of high net worth individuals to foreign banks, which had an average deposit of Rs 1,20,000 per account against the average of Rs 20,000 for accounts of individual depositors with public sector banks.

The odd thing is that this process seems to have slowed down in recent years. Compare, for instance, the figures for 2003 quoted above with average deposits in 2000, when the average deposit of an individual in a foreign bank was Rs 1,19,000 and that of public sector banks was about Rs 16,000.

Has the flow then turned around, with some high net worth individuals turning or returning to public sector banks?

Not really. The answer is that some foreign banks like the HSBC and some private ones like HDFC Bank are aggressively reaching out to the lower middle classes. This is not only for home loans, but also for personal loans.

Thus, the latest offering from HSBC is a high-tech personal loan for individuals with a gross salary income of Rs 75,000 a year.

In particular, the offer of flexible equal monthly instalments leaves customers free to `make their own road.' This offer began appearing on the HSBC Web site when the bank announced that it was planning to bring in another $150 million, while retaining $30 million of repatriable profits generated in India for expanding operations.

Another $63 million, it was announced, would become available for use from profits generated during the current fiscal year.

When you use HDFC Bank ATMs, or visit the parent HDFC's regional offices, you will see the `lower' middle class turning out in larger numbers than those who are better off.

Furthermore, this reaching out has not eroded the business per employee statistic. It seems to be on the way up not only for SBI and Citibank, but also for HSBC and HDFC Bank.

HDFC Bank, has been able to do this, while simultaneously increasing profits per employee, as have Punjab National Bank and IDBI Bank.

HSBC, however, along with Bank of Baroda, ICICI Bank and SBI, has seen the latter figure dropping. Business per employee is on its way up, but profits per employee are moving down.

Perhaps, HSBC intends to tackle this problem at a later date, when it moves from expansion to consolidation.

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